Implementation of safety production risk deposit for enterprises

Our approach is for employees to pay a certain amount as a safety risk deposit; if safe production is maintained on a monthly basis and there are no serious violations by the individual, the deposit is refunded on a one-to-one basis. The employer must establish a detailed assessment system.

Our organization implements an annual assessment system based on safety risk guarantees, with payouts issued upon meeting the requirements. Since accidents are rare, everyone considers it a benefit. Implementing a security deposit system for wind sleeves certainly has no downsides; in case of problems, money will be deducted, which at least serves to raise awareness among employees. But this is merely a means to control security risks, and it won’t have much impact.

Interim Measures for the Management of Safety Production Risk Deposits by Enterprises: In order to enhance enterprises’ awareness of safety production, ensure the fulfillment of safety production responsibilities, and facilitate the smooth conduct of emergency response and disaster relief efforts in case of production safety accidents, the Ministry of Finance, the State Administration of Work Safety, and the People’s Bank of China have jointly formulated and issued the Interim Measures for the Management of Safety Production Risk Deposits by Enterprises. The regulations stipulate that the safety production risk deposit (hereinafter referred to as the risk deposit) refers to funds that a company deposits in a dedicated account in its own name, as a legal entity or partner, and which are used for emergency response to production safety accidents, disaster relief, and subsequent remedial actions. Provincial safety supervision departments and their corresponding financial authorities shall determine the specific amount of risk deposit based on comprehensive factors such as the enterprise’s production volume and sales revenue; for small enterprises, this amount shall be no less than 300,000 yuan ； For medium-sized enterprises, it should be no less than 1 million yuan ； For large enterprises, it should be no less than 1.5 million yuan ； For super-large enterprises, it is not less than 2 million yuan. In principle, the maximum amount that can be held as a risk deposit shall not exceed 5 million yuan. Ministry of Finance, State Administration of Work Safety, and People’s Bank of China: Notice on Issuing the Interim Measures for the Management of Safety Production Risk Deposits by Enterprises – Document No. Cai Jian 369. To the finance departments (bureaus) and work safety supervision bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and cities designated as separate planning units; to the Finance Bureau and Work Safety Supervision Bureau of the Xinjiang Production and Construction Corps; to the Shanghai Head Office of the People’s Bank of China, as well as its various branches and business management departments; and to the central sub-branches in the capital cities of each province: In order to enhance enterprises’ awareness of safety production, ensure the fulfillment of safety production responsibilities, and facilitate effective emergency response and disaster relief efforts in case of production safety accidents, in accordance with the State Council’s Decision on Further Strengthening Safety Production Work (Document No. Guo Fa 2), the Ministry of Finance, the State Administration of Work Safety, and the People’s Bank of China have jointly formulated the Interim Measures for the Management of Safety Production Risk Deposits by Enterprises. These measures are now issued for implementation. Appendix: Interim Measures for the Management of Safety Production Risk Deposits by Enterprises Ministry of Finance **State Administration of Work Safety People’s Bank of China July 26, 2006 Interim Measures for the Management of Safety Production Risk Deposits by Enterprises Article 1 These measures are formulated in accordance with the “Decision of the State Council on Further Strengthening Work Safety” (Guo Fa No. 2), in order to enhance enterprises’ awareness of work safety, ensure the fulfillment of work safety responsibilities, standardize the management of safety production risk deposits, and facilitate the smooth conduct of emergency response and disaster relief efforts in case of work safety accidents. Article 2: For the purposes of these measures, an enterprise refers to a company that is engaged in production and business activities in industries or sectors such as mining (excluding coal mines), transportation, construction, hazardous chemicals, and fireworks. The safety production risk deposit referred to in these measures (hereinafter referred to as the risk deposit) means funds that an enterprise deposits in a dedicated account in its own name as a legal entity or partner, and which are used for emergency response to production safety accidents, disaster relief, and post-incident handling within that enterprise. 3 Chapter 2: Storage of Risk Deposit Article 3 The work safety supervision and management departments of various provinces, autonomous regions, municipalities directly under the Central Government, and cities designated as having separate planning status (hereinafter referred to as provincial work safety supervision and management departments), together with the financial departments at the same level, shall determine the specific amount to be stored in accordance with the following standards. These standards take into account factors such as the scale of the enterprise’s normal production and operations, industry characteristics, output, number of employees, and sales revenue. (1) For small enterprises, the amount to be stored shall be no less than RMB 300,000 (excluding RMB 300,000) ； (II) For medium-sized enterprises, the amount stored shall be not less than RMB 1 million (excluding RMB 1 million) ； (III) Large enterprises shall have a storage amount of not less than RMB 1.5 million (excluding RMB 1.5 million) ； (IV) For super-large enterprises, the amount stored shall be no less than RMB 2 million (excluding RMB 2 million). In principle, the amount of the risk deposit shall not exceed 5 million yuan. The criteria for classifying enterprise size are implemented in accordance with **uniform regulations**. Article 4: Prior to the implementation of these measures, if the standards for depositing risk collateral established by the relevant provincial people’s government departments were higher than those specified in these measures, such original standards shall continue to be applied, and they shall be filed with the relevant departments in accordance with the prescribed procedures. Article 5: The risk deposit shall be deposited in accordance with the following provisions: (1) The enterprise shall deposit the risk deposit on time and in full. Enterprises shall not delay, reduce, or fail to deposit risk collateral funds due to changes in the legal representative or partners of the enterprise, or suspension of operations for rectification, nor shall they allocate such funds to employees in any form. (II) The amount of the risk deposit shall be determined and assigned by the work safety supervision and management departments at the provincial, municipal, and county levels, as well as the finance departments at the same level. (III) The risk deposit shall be managed in a dedicated account. The enterprise shall open a special account for the risk deposit at a bank designated by the provincial work safety supervision and management department and the finance department at the same level as the agent bank (hereinafter referred to as the agent bank), and deposit the amount required as the risk deposit in one lump sum into this special account within 1 month after the notification of approval is received ； Enterprises may withdraw cash from this account in accordance with the regulations on cash management, within the scope of use for the risk deposit specified in these measures. (IV) The specific regulatory measures for the funds in the special account for risk deposits shall be formulated jointly by the provincial safety supervision department and the finance department at the same level. Article 6 Construction and transportation enterprises that operate across provinces (autonomous regions, municipalities directly under the Central Government, and cities designated as separate planning units), cities, and counties (districts), if they have already paid a risk deposit at their place of registration and can provide valid proof, need not deposit an additional risk deposit. 4 Chapter 3: Use of Risk Deposit Article 7 The scope of use for a company’s risk deposit includes: (1) expenses incurred directly for emergency response and disaster relief efforts in order to handle production safety accidents within the company ； (II) Expenses incurred directly in handling the aftermath of production safety accidents within the enterprise. Article 8: The costs associated with emergency response, disaster relief, and post-incident handling that arise after a production safety accident shall be borne entirely by the enterprise. In principle, the enterprise should pay these costs first; if it is indeed necessary to use funds from the special account for risk deposits, then, with the approval of the work safety supervision and management department as well as the finance department at the same level, the issuing bank will handle the relevant procedures. Article 9 In any of the following circumstances, the provincial, municipal, or county-level work safety supervision and management departments, together with the finance departments at the same level, may convert part or all of the risk deposit into funds required for emergency response to production safety accidents, disaster relief, and post-incident handling, depending on the needs of such efforts: (1) The person in charge of the enterprise flees the scene after a production safety accident occurs ； (II) Enterprises that fail to take responsibility proactively within the prescribed time frame after a production safety accident occurs, and fail to cover the costs associated with emergency response, disaster relief, and post-incident handling. 5 Chapter 4 Management of Risk Deposit Editing Article 10 The risk deposit is subject to hierarchical management, with the work being carried out jointly by the work safety supervision and management departments at the provincial, municipal, and county levels, as well as the corresponding financial departments, in accordance with the principle of territorial responsibility. The risk deposit for centrally-administered enterprises is determined by the provincial work safety supervision and management department and the corresponding financial department in the location where the enterprise is situated, and then submitted to the **General Administration of Work Safety Supervision and Management and the Ministry of Finance for record-keeping. Article 11: During the period of continuous operation of an enterprise, if no production safety accidents occur in that year and no use is made of the risk deposit, the amount of the risk deposit carries over automatically, with no additional deposit required in the following year. In the event of a production safety accident that results in the use of risk deposit funds, the provincial, municipal, and county-level departments responsible for work safety supervision and management, along with the corresponding financial authorities, shall re-determine the amount of risk deposit funds that the enterprise is required to hold, and inform the enterprise thereof in a timely manner ； The enterprise shall replenish the risk deposit in accordance with the specified standards within 1 month after the receipt of the approval notice. Article 12: If there are significant changes in the scale of a enterprise’s production and operations, the work safety supervision and management departments at the provincial, municipal, and county levels, together with the corresponding financial departments, shall adjust the amount of the risk deposit required by that enterprise by the end of the first quarter of the following year, and notify the enterprise to make up the difference (or have the deposit refunded) in accordance with the adjusted amount. Article 13: When an enterprise is shut down in accordance with the law, goes bankrupt, or shifts to another industry, upon submission of an application by the enterprise and approval by the work safety supervision and management departments at the provincial, municipal, and county levels as well as the corresponding financial departments, the enterprise may dispose of the funds remaining in its special account for risk deposits at its own discretion in accordance with **relevant regulations. When an enterprise carries out property rights transfer or corporate restructuring, the risk deposit held by it shall still be managed and used in accordance with these provisions. Article 14: The tax treatment methods applicable when the risk deposit is actually disbursed shall be separately formulated by the Ministry of Finance and the **State Taxation Administration. Specific accounting issues are handled in accordance with the **accounting regulations. Article 15: Within 3 months after the end of each fiscal year, the provincial work safety supervision and management departments, together with the financial departments at the same level, shall submit reports on the storage, use, and management of risk deposit funds in their respective regions for the previous year to the **General Administration of Work Safety Supervision and Management and the Ministry of Finance for record-keeping. Article 16: The risk deposit shall be used exclusively for its designated purpose and shall not be misappropriated. If the departments responsible for work safety supervision and management, the financial departments at the same level, and their staff engage in acts such as misappropriating risk deposit funds, in violation of these provisions as well as relevant laws and regulations, they shall be dealt with in accordance with relevant regulations. 6 Chapter V Supplementary Provisions Editing Article 17 Provincial work safety supervision and management departments and the financial departments at the same level may formulate specific implementation measures in accordance with these provisions. Article 18: For enterprise groups that fall outside the scope specified in Paragraph 1, Article 2 of these Measures, if their internal subsidiaries and workshops fall within the specified scope, these Measures shall apply by reference. Article 19 These provisions shall be interpreted by the Ministry of Finance, the **State Administration for Work Safety Supervision and Management, and the People’s Bank of China. Article 20 Coal mining enterprises shall comply with the relevant provisions of the \"Notice by the Ministry of Finance and the **General Administration of Work Safety on Issuing the Interim Measures for the Management of Safety Production Risk Deposits in Coal Mining Enterprises\" (Caijian No. 918). Article 21 These measures shall come into force as of August 1, 2006. Notice from the Ministry of Finance, the State Administration of Work Safety, and the People’s Bank of China on the Issuance of the Interim Measures for the Management of Safety Production Risk Deposits by Enterprises. These measures were originally intended for enterprises, with the aim of enhancing their safety management as well as covering costs related to emergency response to safety incidents, disaster relief, and post-disaster handling ； And it can prevent the boss from running away ； Some companies also adopt similar approaches, mainly to enhance employees’ sense of responsibility for safety and to treat safety work as their own duty